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File 2008 Taxes Online Free

File 2008 taxes online free 22. File 2008 taxes online free   Taxes Table of Contents IntroductionIndian tribal government. File 2008 taxes online free Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. File 2008 taxes online free Real Estate TaxesReal estate taxes for prior years. File 2008 taxes online free Examples. File 2008 taxes online free Form 1099-S. File 2008 taxes online free Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). File 2008 taxes online free It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. File 2008 taxes online free This chapter covers the following topics. File 2008 taxes online free Income taxes (federal, state, local, and foreign). File 2008 taxes online free General sales taxes (state and local). File 2008 taxes online free Real estate taxes (state, local, and foreign). File 2008 taxes online free Personal property taxes (state and local). File 2008 taxes online free Taxes and fees you cannot deduct. File 2008 taxes online free Use Table 22-1 as a guide to determine which taxes you can deduct. File 2008 taxes online free The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. File 2008 taxes online free Business taxes. File 2008 taxes online free   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. File 2008 taxes online free For information on these taxes, see Publication 535, Business Expenses. File 2008 taxes online free State or local taxes. File 2008 taxes online free   These are taxes imposed by the 50 states, U. File 2008 taxes online free S. File 2008 taxes online free possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. File 2008 taxes online free Indian tribal government. File 2008 taxes online free   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. File 2008 taxes online free Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. File 2008 taxes online free General sales taxes. File 2008 taxes online free   These are taxes imposed at one rate on retail sales of a broad range of classes of items. File 2008 taxes online free Foreign taxes. File 2008 taxes online free   These are taxes imposed by a foreign country or any of its political subdivisions. File 2008 taxes online free Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. File 2008 taxes online free The tax must be imposed on you. File 2008 taxes online free You must pay the tax during your tax year. File 2008 taxes online free The tax must be imposed on you. File 2008 taxes online free   In general, you can deduct only taxes imposed on you. File 2008 taxes online free   Generally, you can deduct property taxes only if you are an owner of the property. File 2008 taxes online free If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. File 2008 taxes online free You must pay the tax during your tax year. File 2008 taxes online free   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. File 2008 taxes online free If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. File 2008 taxes online free If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. File 2008 taxes online free If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). File 2008 taxes online free See Publication 538, Accounting Periods and Methods, for details. File 2008 taxes online free    If you use an accrual method of accounting, see Publication 538 for more information. File 2008 taxes online free Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. File 2008 taxes online free State and Local Income Taxes You can deduct state and local income taxes. File 2008 taxes online free However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. File 2008 taxes online free See General Sales Taxes , later. File 2008 taxes online free Exception. File 2008 taxes online free    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. File 2008 taxes online free For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. File 2008 taxes online free What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. File 2008 taxes online free Withheld taxes. File 2008 taxes online free   You can deduct state and local income taxes withheld from your salary in the year they are withheld. File 2008 taxes online free Your Form(s) W-2 will show these amounts. File 2008 taxes online free Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. File 2008 taxes online free Estimated tax payments. File 2008 taxes online free   You can deduct estimated tax payments you made during the year to a state or local government. File 2008 taxes online free However, you must have a reasonable basis for making the estimated tax payments. File 2008 taxes online free Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. File 2008 taxes online free For example, you made an estimated state income tax payment. File 2008 taxes online free However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. File 2008 taxes online free You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. File 2008 taxes online free Refund applied to taxes. File 2008 taxes online free   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. File 2008 taxes online free    Do not reduce your deduction by either of the following items. File 2008 taxes online free Any state or local income tax refund (or credit) you expect to receive for 2013. File 2008 taxes online free Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. File 2008 taxes online free   However, part or all of this refund (or credit) may be taxable. File 2008 taxes online free See Refund (or credit) of state or local income taxes , later. File 2008 taxes online free Separate federal returns. File 2008 taxes online free   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. File 2008 taxes online free Joint state and local returns. File 2008 taxes online free   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. File 2008 taxes online free You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. File 2008 taxes online free However, you cannot deduct more than the amount you actually paid during the year. File 2008 taxes online free You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. File 2008 taxes online free If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. File 2008 taxes online free Joint federal return. File 2008 taxes online free   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. File 2008 taxes online free Contributions to state benefit funds. File 2008 taxes online free    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. File 2008 taxes online free For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. File 2008 taxes online free Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. File 2008 taxes online free Alaska Unemployment Compensation Fund. File 2008 taxes online free California Nonoccupational Disability Benefit Fund. File 2008 taxes online free New Jersey Nonoccupational Disability Benefit Fund. File 2008 taxes online free New Jersey Unemployment Compensation Fund. File 2008 taxes online free New York Nonoccupational Disability Benefit Fund. File 2008 taxes online free Pennsylvania Unemployment Compensation Fund. File 2008 taxes online free Rhode Island Temporary Disability Benefit Fund. File 2008 taxes online free Washington State Supplemental Workmen's Compensation Fund. File 2008 taxes online free    Employee contributions to private or voluntary disability plans are not deductible. File 2008 taxes online free Refund (or credit) of state or local income taxes. File 2008 taxes online free   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. File 2008 taxes online free This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. File 2008 taxes online free If you did not itemize your deductions in the previous year, do not include the refund in income. File 2008 taxes online free If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. File 2008 taxes online free For a discussion of how much to include, see Recoveries in chapter 12. File 2008 taxes online free Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. File 2008 taxes online free S. File 2008 taxes online free possession. File 2008 taxes online free However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. File 2008 taxes online free S. File 2008 taxes online free tax under the foreign earned income exclusion or the foreign housing exclusion. File 2008 taxes online free For information on these exclusions, see Publication 54, Tax Guide for U. File 2008 taxes online free S. File 2008 taxes online free Citizens and Resident Aliens Abroad. File 2008 taxes online free For information on the foreign tax credit, see Publication 514. File 2008 taxes online free General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. File 2008 taxes online free You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. File 2008 taxes online free Actual expenses. File 2008 taxes online free   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. File 2008 taxes online free However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. File 2008 taxes online free If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. File 2008 taxes online free If you use the actual expenses method, you must have receipts to show the general sales taxes paid. File 2008 taxes online free Do not include sales taxes paid on items used in your trade or business. File 2008 taxes online free Motor vehicles. File 2008 taxes online free   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. File 2008 taxes online free This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. File 2008 taxes online free Optional sales tax tables. File 2008 taxes online free   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). File 2008 taxes online free You may also be able to add the state and local general sales taxes paid on certain specified items. File 2008 taxes online free   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. File 2008 taxes online free Your income is your adjusted gross income plus any nontaxable items such as the following. File 2008 taxes online free Tax-exempt interest. File 2008 taxes online free Veterans' benefits. File 2008 taxes online free Nontaxable combat pay. File 2008 taxes online free Workers' compensation. File 2008 taxes online free Nontaxable part of social security and railroad retirement benefits. File 2008 taxes online free Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. File 2008 taxes online free Public assistance payments. File 2008 taxes online free If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. File 2008 taxes online free See the Instructions for Schedule A (Form 1040), line 5, for details. File 2008 taxes online free Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. File 2008 taxes online free You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. File 2008 taxes online free Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. File 2008 taxes online free They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. File 2008 taxes online free For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. File 2008 taxes online free Tenant-shareholders in a cooperative housing corporation. File 2008 taxes online free   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. File 2008 taxes online free The corporation should provide you with a statement showing your share of the taxes. File 2008 taxes online free For more information, see Special Rules for Cooperatives in Publication 530. File 2008 taxes online free Division of real estate taxes between buyers and sellers. File 2008 taxes online free   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. File 2008 taxes online free   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. File 2008 taxes online free The seller is treated as paying the taxes up to, but not including, the date of sale. File 2008 taxes online free The buyer is treated as paying the taxes beginning with the date of sale. File 2008 taxes online free This applies regardless of the lien dates under local law. File 2008 taxes online free Generally, this information is included on the settlement statement provided at the closing. File 2008 taxes online free    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. File 2008 taxes online free This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. File 2008 taxes online free However, you must also include the amount of that tax in the selling price of the property. File 2008 taxes online free The buyer must include the same amount in his or her cost of the property. File 2008 taxes online free   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. File 2008 taxes online free Worksheet 22-1. File 2008 taxes online free Figuring Your Real Estate Tax Deduction 1. File 2008 taxes online free Enter the total real estate taxes for the real property tax year   2. File 2008 taxes online free Enter the number of days in the real property tax year that you owned the property   3. File 2008 taxes online free Divide line 2 by 365 (for leap years, divide line 2 by 366) . File 2008 taxes online free 4. File 2008 taxes online free Multiply line 1 by line 3. File 2008 taxes online free This is your deduction. File 2008 taxes online free Enter it on Schedule A (Form 1040), line 6   Note. File 2008 taxes online free Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. File 2008 taxes online free Your total deduction is the sum of the line 4 amounts for all of the properties. File 2008 taxes online free Real estate taxes for prior years. File 2008 taxes online free   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. File 2008 taxes online free Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. File 2008 taxes online free The buyer must add them to the cost of the property. File 2008 taxes online free The seller can deduct these taxes paid by the buyer. File 2008 taxes online free However, the seller must include them in the selling price. File 2008 taxes online free Examples. File 2008 taxes online free   The following examples illustrate how real estate taxes are divided between buyer and seller. File 2008 taxes online free Example 1. File 2008 taxes online free Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. File 2008 taxes online free The tax on their old home, sold on May 7, was $620. File 2008 taxes online free The tax on their new home, bought on May 3, was $732. File 2008 taxes online free Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. File 2008 taxes online free On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. File 2008 taxes online free Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). File 2008 taxes online free They figure their deduction for taxes on their old home as follows. File 2008 taxes online free Worksheet 22-1. File 2008 taxes online free Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. File 2008 taxes online free Enter the total real estate taxes for the real property tax year $620 2. File 2008 taxes online free Enter the number of days in the real property tax year that you owned the property 126 3. File 2008 taxes online free Divide line 2 by 365 (for leap years, divide line 2 by 366) . File 2008 taxes online free 3452 4. File 2008 taxes online free Multiply line 1 by line 3. File 2008 taxes online free This is your deduction. File 2008 taxes online free Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. File 2008 taxes online free (The buyers add the $214 to their cost of the home. File 2008 taxes online free ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). File 2008 taxes online free They figure their deduction for taxes on their new home as follows. File 2008 taxes online free Worksheet 22-1. File 2008 taxes online free Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. File 2008 taxes online free Enter the total real estate taxes for the real property tax year $732 2. File 2008 taxes online free Enter the number of days in the real property tax year that you owned the property 243 3. File 2008 taxes online free Divide line 2 by 365 (for leap years, divide line 2 by 366) . File 2008 taxes online free 6658 4. File 2008 taxes online free Multiply line 1 by line 3. File 2008 taxes online free This is your deduction. File 2008 taxes online free Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. File 2008 taxes online free (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. File 2008 taxes online free ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. File 2008 taxes online free They will enter this amount on Schedule A (Form 1040), line 6. File 2008 taxes online free Example 2. File 2008 taxes online free George and Helen Brown bought a new home on May 3, 2013. File 2008 taxes online free Their real property tax year for the new home is the calendar year. File 2008 taxes online free Real estate taxes for 2012 were assessed in their state on January 1, 2013. File 2008 taxes online free The taxes became due on May 31, 2013, and October 31, 2013. File 2008 taxes online free The Browns agreed to pay all taxes due after the date of purchase. File 2008 taxes online free Real estate taxes for 2012 were $680. File 2008 taxes online free They paid $340 on May 31, 2013, and $340 on October 31, 2013. File 2008 taxes online free These taxes were for the 2012 real property tax year. File 2008 taxes online free The Browns cannot deduct them since they did not own the property until 2013. File 2008 taxes online free Instead, they must add $680 to the cost of their new home. File 2008 taxes online free In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. File 2008 taxes online free The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). File 2008 taxes online free They will figure their 2014 deduction for taxes as follows. File 2008 taxes online free Worksheet 22-1. File 2008 taxes online free Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. File 2008 taxes online free Enter the total real estate taxes for the real property tax year $752 2. File 2008 taxes online free Enter the number of days in the real property tax year that you owned the property 243 3. File 2008 taxes online free Divide line 2 by 365 (for leap years, divide line 2 by 366) . File 2008 taxes online free 6658 4. File 2008 taxes online free Multiply line 1 by line 3. File 2008 taxes online free This is your deduction. File 2008 taxes online free Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. File 2008 taxes online free Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. File 2008 taxes online free This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. File 2008 taxes online free The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. File 2008 taxes online free The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. File 2008 taxes online free Form 1099-S. File 2008 taxes online free   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. File 2008 taxes online free Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. File 2008 taxes online free The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. File 2008 taxes online free   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. File 2008 taxes online free The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. File 2008 taxes online free See Refund (or rebate) , later. File 2008 taxes online free Taxes placed in escrow. File 2008 taxes online free   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. File 2008 taxes online free You can deduct only the real estate tax that the third party actually paid to the taxing authority. File 2008 taxes online free If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. File 2008 taxes online free Tenants by the entirety. File 2008 taxes online free   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. File 2008 taxes online free Divorced individuals. File 2008 taxes online free   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. File 2008 taxes online free See Taxes and insurance in chapter 18 for more information. File 2008 taxes online free Ministers' and military housing allowances. File 2008 taxes online free   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. File 2008 taxes online free Refund (or rebate). File 2008 taxes online free   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. File 2008 taxes online free If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. File 2008 taxes online free However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. File 2008 taxes online free For more information, see Recoveries in chapter 12. File 2008 taxes online free Table 22-1. File 2008 taxes online free Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. File 2008 taxes online free Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). File 2008 taxes online free     Fines and penalties. File 2008 taxes online free Income Taxes State and local income taxes. File 2008 taxes online free Federal income taxes. File 2008 taxes online free   Foreign income taxes. File 2008 taxes online free     Employee contributions to state funds listed under Contributions to state benefit funds . File 2008 taxes online free Employee contributions to private or voluntary disability plans. File 2008 taxes online free     State and local general sales taxes if you choose to deduct state and local income taxes. File 2008 taxes online free General Sales Taxes State and local general sales taxes, including compensating use taxes. File 2008 taxes online free State and local income taxes if you choose to deduct state and local general sales taxes. File 2008 taxes online free Other Taxes Taxes that are expenses of your trade or business. File 2008 taxes online free Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. File 2008 taxes online free   Taxes on property producing rent or royalty income. File 2008 taxes online free Per capita taxes. File 2008 taxes online free   Occupational taxes. File 2008 taxes online free See chapter 28. File 2008 taxes online free     One-half of self-employment tax paid. File 2008 taxes online free   Personal Property Taxes State and local personal property taxes. File 2008 taxes online free Customs duties that are not expenses of your trade or business or of producing income. File 2008 taxes online free Real Estate Taxes State and local real estate taxes. File 2008 taxes online free Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). File 2008 taxes online free   Foreign real estate taxes. File 2008 taxes online free Taxes for local benefits (with exceptions). File 2008 taxes online free See Real Estate-Related Items You Cannot Deduct . File 2008 taxes online free   Tenant's share of real estate taxes paid by  cooperative housing corporation. File 2008 taxes online free Trash and garbage pickup fees (with exceptions). File 2008 taxes online free See Real Estate-Related Items You Cannot Deduct . File 2008 taxes online free     Rent increase due to higher real estate taxes. File 2008 taxes online free     Homeowners' association charges. File 2008 taxes online free Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. File 2008 taxes online free Taxes for local benefits. File 2008 taxes online free Itemized charges for services (such as trash and garbage pickup fees). File 2008 taxes online free Transfer taxes (or stamp taxes). File 2008 taxes online free Rent increases due to higher real estate taxes. File 2008 taxes online free Homeowners' association charges. File 2008 taxes online free Taxes for local benefits. File 2008 taxes online free   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. File 2008 taxes online free These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. File 2008 taxes online free You should increase the basis of your property by the amount of the assessment. File 2008 taxes online free   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. File 2008 taxes online free If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. File 2008 taxes online free If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. File 2008 taxes online free    Taxes for local benefits may be included in your real estate tax bill. File 2008 taxes online free If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. File 2008 taxes online free You should use the rules above to determine if the local benefit tax is deductible. File 2008 taxes online free Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. File 2008 taxes online free Itemized charges for services. File 2008 taxes online free    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. File 2008 taxes online free For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). File 2008 taxes online free    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. File 2008 taxes online free If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. File 2008 taxes online free Exception. File 2008 taxes online free   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. File 2008 taxes online free Transfer taxes (or stamp taxes). File 2008 taxes online free   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. File 2008 taxes online free If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. File 2008 taxes online free If paid by the buyer, they are included in the cost basis of the property. File 2008 taxes online free Rent increase due to higher real estate taxes. File 2008 taxes online free   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. File 2008 taxes online free Homeowners' association charges. File 2008 taxes online free   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. File 2008 taxes online free Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. File 2008 taxes online free A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. File 2008 taxes online free For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. File 2008 taxes online free If the tax is partly based on value and partly based on other criteria, it may qualify in part. File 2008 taxes online free Example. File 2008 taxes online free Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. File 2008 taxes online free You paid $32 based on the value ($1,500) and weight (3,400 lbs. File 2008 taxes online free ) of your car. File 2008 taxes online free You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. File 2008 taxes online free The remaining $17 ($. File 2008 taxes online free 50 × 34), based on the weight, is not deductible. File 2008 taxes online free Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. File 2008 taxes online free Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. File 2008 taxes online free See Table 22-1. File 2008 taxes online free Taxes and fees that are generally not deductible include the following items. File 2008 taxes online free Employment taxes. File 2008 taxes online free This includes social security, Medicare, and railroad retirement taxes withheld from your pay. File 2008 taxes online free However, one-half of self-employment tax you pay is deductible. File 2008 taxes online free In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. File 2008 taxes online free For more information, see chapters 21 and 32. File 2008 taxes online free Estate, inheritance, legacy, or succession taxes. File 2008 taxes online free However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. File 2008 taxes online free In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. File 2008 taxes online free For more information, see Publication 559, Survivors, Executors, and Administrators. File 2008 taxes online free Federal income taxes. File 2008 taxes online free This includes income taxes withheld from your pay. File 2008 taxes online free Fines and penalties. File 2008 taxes online free You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. File 2008 taxes online free Gift taxes. File 2008 taxes online free License fees. File 2008 taxes online free You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). File 2008 taxes online free Per capita taxes. File 2008 taxes online free You cannot deduct state or local per capita taxes. File 2008 taxes online free Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. File 2008 taxes online free For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. File 2008 taxes online free Where To Deduct You deduct taxes on the following schedules. File 2008 taxes online free State and local income taxes. File 2008 taxes online free    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. File 2008 taxes online free Check box a on line 5. File 2008 taxes online free General sales taxes. File 2008 taxes online free   Sales taxes are deducted on Schedule A (Form 1040), line 5. File 2008 taxes online free You must check box b on line 5. File 2008 taxes online free If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. File 2008 taxes online free Foreign income taxes. File 2008 taxes online free   Generally, income taxes you pay to a foreign country or U. File 2008 taxes online free S. File 2008 taxes online free possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. File 2008 taxes online free S. File 2008 taxes online free income tax on Form 1040, line 47. File 2008 taxes online free To claim the credit, you may have to complete and attach Form 1116. File 2008 taxes online free For more information, see chapter 37, the Form 1040 instructions, or Publication 514. File 2008 taxes online free Real estate taxes and personal property taxes. File 2008 taxes online free    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). File 2008 taxes online free Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). File 2008 taxes online free Self-employment tax. File 2008 taxes online free    Deduct one-half of your self-employment tax on Form 1040, line 27. File 2008 taxes online free Other taxes. File 2008 taxes online free    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. File 2008 taxes online free Prev  Up  Next   Home   More Online Publications
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File 2008 taxes online free 3. File 2008 taxes online free   Limit on Annual Additions Table of Contents Ministers and church employees. File 2008 taxes online free Includible Compensation for Your Most Recent Year of ServiceMost Recent Year of Service Includible Compensation The first component of MAC is the limit on annual additions. File 2008 taxes online free This is a limit on the total contributions (elective deferrals, nonelective contributions, and after-tax contributions) that can be made to your 403(b) account. File 2008 taxes online free The limit on annual additions generally is the lesser of: $51,000 for 2013 and $52,000 for 2014, or 100% of your includible compensation for your most recent year of service. File 2008 taxes online free More than one 403(b) account. File 2008 taxes online free If you contributed to more than one 403(b) account, you must combine the contributions made to all 403(b) accounts on your behalf by your employer. File 2008 taxes online free Ministers and church employees. File 2008 taxes online free   If you are a minister or a church employee, you may be able to increase your limit on annual additions or use different rules when figuring your limit on annual additions. File 2008 taxes online free For more information, see chapter 5. File 2008 taxes online free Participation in a qualified plan. File 2008 taxes online free If you participated in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pensions of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. File 2008 taxes online free You can use Part I of Worksheet 1 in chapter 9 to figure your limit on annual additions. File 2008 taxes online free Includible Compensation for Your Most Recent Year of Service Definition. File 2008 taxes online free   Generally, includible compensation for your most recent year of service is the amount of taxable wages and benefits you received from the employer that maintained a 403(b) account for your benefit during your most recent year of service. File 2008 taxes online free When figuring your includible compensation for your most recent year of service, keep in mind that your most recent year of service may not be the same as your employer's most recent annual work period. File 2008 taxes online free This can happen if your tax year is not the same as your employer's annual work period. File 2008 taxes online free When figuring includible compensation for your most recent year of service, do not mix compensation or service of one employer with compensation or service of another employer. File 2008 taxes online free Most Recent Year of Service Your most recent year of service is your last full year of service, ending on the last day of your tax year that you worked for the employer that maintained a 403(b) account on your behalf. File 2008 taxes online free Tax year different from employer's annual work period. File 2008 taxes online free   If your tax year is not the same as your employer's annual work period, your most recent year of service is made up of parts of at least two of your employer's annual work periods. File 2008 taxes online free Example. File 2008 taxes online free A professor who reports her income on a calendar-year basis is employed on a full-time basis by a university that operates on an academic year (October through May). File 2008 taxes online free To figure her includible compensation for 2013, the professor's most recent year of service is her service from January through May 2013 and from October through December 2013. File 2008 taxes online free Figuring Your Most Recent Year of Service To figure your most recent year of service, begin by determining what is a full year of service for your position. File 2008 taxes online free A full year of service is equal to full-time employment for your employer's annual work period. File 2008 taxes online free After identifying a full year of service, begin counting the service you have provided for your employer starting with the service provided in the current year. File 2008 taxes online free Part-time or employed only part of the year. File 2008 taxes online free   If you are a part-time or a full-time employee who is employed for only part of the year, your most recent year of service is your service this year and your service for as many previous years as is necessary to total 1 full year of service. File 2008 taxes online free To determine your most recent year of service, add the following periods of service: Your service during the year for which you are figuring the limit on annual additions, and Your service during your preceding tax years until the total service equals 1 year of service or you have figured all of your service with the employer. File 2008 taxes online free Example. File 2008 taxes online free You were employed on a full-time basis from July through December 2011 (1/2 year of service), July through December 2012 (1/2 year of service), and October through December 2013 (1/4 year of service). File 2008 taxes online free Your most recent year of service for computing your limit on annual additions for 2013 is the total of your service during 2013 (1/4 year of service), your service during 2012 (1/2 year of service), and your service during the months October through December 2011 (1/4 year of service). File 2008 taxes online free Not yet employed for 1 year. File 2008 taxes online free   If, at the close of the year, you have not yet worked for your employer for 1 year (including time you worked for the same employer in all earlier years), use the period of time you have worked for the employer as your most recent year of service. File 2008 taxes online free Includible Compensation After identifying your most recent year of service, the next step is to identify the includible compensation associated with that full year of service. File 2008 taxes online free Includible compensation is not the same as income included on your tax return. File 2008 taxes online free Compensation is a combination of income and benefits received in exchange for services provided to your employer. File 2008 taxes online free Generally, includible compensation is the amount of income and benefits: Received from the employer who maintains your 403(b) account, and Must be included in your income. File 2008 taxes online free Includible compensation includes the following amounts. File 2008 taxes online free Elective deferrals (employer's contributions made on your behalf under a salary reduction agreement). File 2008 taxes online free Amounts contributed or deferred by your employer under a section 125 cafeteria plan. File 2008 taxes online free Amounts contributed or deferred, at the election of the employee, under an eligible section 457 nonqualified deferred compensation plan (state or local government or tax-exempt organization plan). File 2008 taxes online free  Note. File 2008 taxes online free For information about treating elective deferrals under section 457 plans as Roth contributions, see Publication 575. File 2008 taxes online free Wages, salaries, and fees for personal services earned with the employer maintaining your 403(b) account. File 2008 taxes online free Income otherwise excluded under the foreign earned income exclusion. File 2008 taxes online free Pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan. File 2008 taxes online free Includible compensation does not include the following items. File 2008 taxes online free Your employer's contributions to your 403(b) account. File 2008 taxes online free Compensation earned while your employer was not an eligible employer. File 2008 taxes online free Your employer's contributions to a qualified plan that: Are on your behalf, and Are excludable from income. File 2008 taxes online free The cost of incidental life insurance. File 2008 taxes online free See Cost of Incidental Life Insurance, later. File 2008 taxes online free If you are a church employee or a foreign missionary, figure includible compensation using the rules explained in chapter 5. File 2008 taxes online free Contributions after retirement. File 2008 taxes online free   Nonelective contributions may be made for an employee for up to 5 years after retirement. File 2008 taxes online free These contributions would be based on includible compensation for the last year of service before retirement. File 2008 taxes online free Cost of Incidental Life Insurance Includible compensation does not include the cost of incidental life insurance. File 2008 taxes online free If all of your 403(b) accounts invest only in mutual funds, then you have no incidental life insurance. File 2008 taxes online free If you have an annuity contract, a portion of the cost of that contract may be for incidental life insurance. File 2008 taxes online free If so, the cost of the insurance is taxable to you in the year contributed and is considered part of your basis when distributed. File 2008 taxes online free Your employer will include the cost of your insurance as taxable wages in box 1 of Form W-2. File 2008 taxes online free Not all annuity contracts include life insurance. File 2008 taxes online free Contact your plan administrator to determine if your contract includes incidental life insurance. File 2008 taxes online free If it does, you will need to figure the cost of life insurance each year the policy is in effect. File 2008 taxes online free Figuring the cost of incidental life insurance. File 2008 taxes online free If you have determined that part of the cost of your annuity contract is for an incidental life insurance premium, you will need to determine the amount of the premium and subtract it from your includible compensation. File 2008 taxes online free To determine the amount of the life insurance premiums, you will need to know the following information. File 2008 taxes online free The value of your life insurance contract, which is the amount payable upon your death. File 2008 taxes online free The cash value of your life insurance contract at the end of the tax year. File 2008 taxes online free Your age on your birthday nearest the beginning of the policy year. File 2008 taxes online free Your current life insurance protection under an ordinary retirement income life insurance policy, which is the amount payable upon your death minus the cash value of the contract at the end of the year. File 2008 taxes online free You can use Worksheet A, in chapter 9, to determine the cost of your incidental life insurance. File 2008 taxes online free Example. File 2008 taxes online free Your new contract provides that your beneficiary will receive $10,000 if you should die before retirement. File 2008 taxes online free Your cash value in the contract at the end of the first year is zero. File 2008 taxes online free Your current life insurance protection for the first year is $10,000 ($10,000 − 0). File 2008 taxes online free The cash value in the contract at the end of year two is $1,000, and the current life insurance protection for the second year is $9,000 ($10,000 – $1,000). File 2008 taxes online free The 1-year cost of the protection can be calculated by using Figure 3-1, Table of One-Year Term Premiums for $1,000 Life Insurance Protection . File 2008 taxes online free The premium rate is determined based on your age on your birthday nearest the beginning of the policy year. File 2008 taxes online free Figure 3-1. File 2008 taxes online free Table of One-Year Term Premiums for $1,000 Life Insurance Protection Age Cost   Age Cost   Age Cost 0 $0. File 2008 taxes online free 70   35 $0. File 2008 taxes online free 99   70 $20. File 2008 taxes online free 62 1 0. File 2008 taxes online free 41   36 1. File 2008 taxes online free 01   71 22. File 2008 taxes online free 72 2 0. File 2008 taxes online free 27   37 1. File 2008 taxes online free 04   72 25. File 2008 taxes online free 07 3 0. File 2008 taxes online free 19   38 1. File 2008 taxes online free 06   73 27. File 2008 taxes online free 57 4 0. File 2008 taxes online free 13   39 1. File 2008 taxes online free 07   74 30. File 2008 taxes online free 18 5 0. File 2008 taxes online free 13   40 1. File 2008 taxes online free 10   75 33. File 2008 taxes online free 05 6 0. File 2008 taxes online free 14   41 1. File 2008 taxes online free 13   76 36. File 2008 taxes online free 33 7 0. File 2008 taxes online free 15   42 1. File 2008 taxes online free 20   77 40. File 2008 taxes online free 17 8 0. File 2008 taxes online free 16   43 1. File 2008 taxes online free 29   78 44. File 2008 taxes online free 33 9 0. File 2008 taxes online free 16   44 1. File 2008 taxes online free 40   79 49. File 2008 taxes online free 23 10 0. File 2008 taxes online free 16   45 1. File 2008 taxes online free 53   80 54. File 2008 taxes online free 56 11 0. File 2008 taxes online free 19   46 1. File 2008 taxes online free 67   81 60. File 2008 taxes online free 51 12 0. File 2008 taxes online free 24   47 1. File 2008 taxes online free 83   82 66. File 2008 taxes online free 74 13 0. File 2008 taxes online free 28   48 1. File 2008 taxes online free 98   83 73. File 2008 taxes online free 07 14 0. File 2008 taxes online free 33   49 2. File 2008 taxes online free 13   84 80. File 2008 taxes online free 35 15 0. File 2008 taxes online free 38   50 2. File 2008 taxes online free 30   85 88. File 2008 taxes online free 76 16 0. File 2008 taxes online free 52   51 2. File 2008 taxes online free 52   86 99. File 2008 taxes online free 16 17 0. File 2008 taxes online free 57   52 2. File 2008 taxes online free 81   87 110. File 2008 taxes online free 40 18 0. File 2008 taxes online free 59   53 3. File 2008 taxes online free 20   88 121. File 2008 taxes online free 85 19 0. File 2008 taxes online free 61   54 3. File 2008 taxes online free 65   89 133. File 2008 taxes online free 40 20 0. File 2008 taxes online free 62   55 4. File 2008 taxes online free 15   90 144. File 2008 taxes online free 30 21 0. File 2008 taxes online free 62   56 4. File 2008 taxes online free 68   91 155. File 2008 taxes online free 80 22 0. File 2008 taxes online free 64   57 5. File 2008 taxes online free 20   92 168. File 2008 taxes online free 75 23 0. File 2008 taxes online free 66   58 5. File 2008 taxes online free 66   93 186. File 2008 taxes online free 44 24 0. File 2008 taxes online free 68   59 6. File 2008 taxes online free 06   94 206. File 2008 taxes online free 70 25 0. File 2008 taxes online free 71   60 6. File 2008 taxes online free 51   95 228. File 2008 taxes online free 35 26 0. File 2008 taxes online free 73   61 7. File 2008 taxes online free 11   96 250. File 2008 taxes online free 01 27 0. File 2008 taxes online free 76   62 7. File 2008 taxes online free 96   97 265. File 2008 taxes online free 09 28 0. File 2008 taxes online free 80   63 9. File 2008 taxes online free 08   98 270. File 2008 taxes online free 11 29 0. File 2008 taxes online free 83   64 10. File 2008 taxes online free 41   99 281. File 2008 taxes online free 05 30 0. File 2008 taxes online free 87   65 11. File 2008 taxes online free 90       31 0. File 2008 taxes online free 90   66 13. File 2008 taxes online free 51       32 0. File 2008 taxes online free 93   67 15. File 2008 taxes online free 20       33 0. File 2008 taxes online free 96   68 16. File 2008 taxes online free 92       34 0. File 2008 taxes online free 98   69 18. File 2008 taxes online free 70                       If the current published premium rates per $1,000 of insurance protection charged by an insurer for individual 1-year term life insurance premiums available to all standard risks are lower than those in the preceding table, you can use the lower rates for figuring the cost of insurance in connection with individual policies issued by the same insurer. File 2008 taxes online free Example 1. File 2008 taxes online free Lynne Green, age 44, and her employer enter into a 403(b) plan that will provide her with a $500 a month annuity upon retirement at age 65. File 2008 taxes online free The agreement also provides that if she should die before retirement, her beneficiary will receive the greater of $20,000 or the cash surrender value in the life insurance contract. File 2008 taxes online free Using the facts presented we can determine the cost of Lynne's life insurance protection as shown in Table 3-1. File 2008 taxes online free Lynne's employer has included $28 for the cost of the life insurance protection in her current year's income. File 2008 taxes online free When figuring her includible compensation for this year, Lynne will subtract $28. File 2008 taxes online free Table 3-1. File 2008 taxes online free Worksheet A. File 2008 taxes online free Cost of Incidental Life Insurance Note. File 2008 taxes online free Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. File 2008 taxes online free This amount will be used to figure includible compensation for your most recent year of service. File 2008 taxes online free 1. File 2008 taxes online free Enter the value of the contract (amount payable upon your death) 1. File 2008 taxes online free $20,000. File 2008 taxes online free 00 2. File 2008 taxes online free Enter the cash value in the contract at the end of the year 2. File 2008 taxes online free 0. File 2008 taxes online free 00 3. File 2008 taxes online free Subtract line 2 from line 1. File 2008 taxes online free This is the value of your current life insurance protection 3. File 2008 taxes online free $20,000. File 2008 taxes online free 00 4. File 2008 taxes online free Enter your age on your birthday nearest the beginning of the policy year 4. File 2008 taxes online free 44 5. File 2008 taxes online free Enter the 1-year term premium for $1,000 of life insurance based on your age. File 2008 taxes online free (From Figure 3-1) 5. File 2008 taxes online free $1. File 2008 taxes online free 40 6. File 2008 taxes online free Divide line 3 by $1,000 6. File 2008 taxes online free 20 7. File 2008 taxes online free Multiply line 6 by line 5. File 2008 taxes online free This is the cost of your incidental life insurance 7. File 2008 taxes online free $28. File 2008 taxes online free 00 Example 2. File 2008 taxes online free Lynne's cash value in the contract at the end of the second year is $1,000. File 2008 taxes online free In year two, the cost of Lynne's life insurance is calculated as shown in Table 3-2. File 2008 taxes online free In year two, Lynne's employer will include $29. File 2008 taxes online free 07 in her current year's income. File 2008 taxes online free Lynne will subtract this amount when figuring her includible compensation. File 2008 taxes online free Table 3-2. File 2008 taxes online free Worksheet A. File 2008 taxes online free Cost of Incidental Life Insurance Note. File 2008 taxes online free Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. File 2008 taxes online free This amount will be used to figure includible compensation for your most recent year of service. File 2008 taxes online free 1. File 2008 taxes online free Enter the value of the contract (amount payable upon your death) 1. File 2008 taxes online free $20,000. File 2008 taxes online free 00 2. File 2008 taxes online free Enter the cash value in the contract at the end of the year 2. File 2008 taxes online free $1,000. File 2008 taxes online free 00 3. File 2008 taxes online free Subtract line 2 from line 1. File 2008 taxes online free This is the value of your current life insurance protection 3. File 2008 taxes online free $19,000. File 2008 taxes online free 00 4. File 2008 taxes online free Enter your age on your birthday nearest the beginning of the policy year 4. File 2008 taxes online free 45 5. File 2008 taxes online free Enter the 1-year term premium for $1,000 of life insurance based on your age. File 2008 taxes online free (From Figure 3-1) 5. File 2008 taxes online free $1. File 2008 taxes online free 53 6. File 2008 taxes online free Divide line 3 by $1,000 6. File 2008 taxes online free 19 7. File 2008 taxes online free Multiply line 6 by line 5. File 2008 taxes online free This is the cost of your incidental life insurance 7. File 2008 taxes online free $29. File 2008 taxes online free 07 Figuring Includible Compensation for Your Most Recent Year of Service You can use Worksheet B in chapter 9 to determine your includible compensation for your most recent year of service. File 2008 taxes online free Example. File 2008 taxes online free Floyd has been periodically working full-time for a local hospital since September 2011. File 2008 taxes online free He needs to figure his limit on annual additions for 2014. File 2008 taxes online free The hospital's normal annual work period for employees in Floyd's general type of work runs from January to December. File 2008 taxes online free During the periods that Floyd was employed with the hospital, the hospital has always been eligible to provide a 403(b) plan to employees. File 2008 taxes online free Additionally, the hospital has never provided the employees with a 457 deferred compensation plan, a transportation fringe benefit plan, or a cafeteria plan. File 2008 taxes online free Floyd has never worked abroad and there is no life insurance provided under the plan. File 2008 taxes online free Table 3-3 shows the service Floyd provided to his employer, his compensation for the periods worked, his elective deferrals, and his taxable wages. File 2008 taxes online free Table 3-3. File 2008 taxes online free Floyd's Compensation Note. File 2008 taxes online free This table shows information Floyd will use to figure includible compensation for his most recent year of service. File 2008 taxes online free   Year Years of Service Taxable Wages Elective Deferrals 2014 6/12 of  a year $42,000 $2,000 2013 4/12 of  a year $16,000 $1,650 2012 4/12 of  a year $16,000 $1,650 Before Floyd can figure his limit on annual additions, he must figure includible compensation for his most recent year of service. File 2008 taxes online free Because Floyd is not planning to work the entire 2014 year, his most recent year of service will include the time he is planning to work in 2014 plus time he worked in the preceding 3 years until the time he worked for the hospital totals 1 year. File 2008 taxes online free If the total time he worked is less than 1 year, Floyd will treat it as if it were 1 year. File 2008 taxes online free He figures his most recent year of service shown in the following list. File 2008 taxes online free Time he will work in 2014 is 6/12 of a year. File 2008 taxes online free Time worked in 2013 is 4/12 of a year. File 2008 taxes online free All of this time will be used to determine Floyd's most recent year of service. File 2008 taxes online free Time worked in 2012 is 4/12 of a year. File 2008 taxes online free Floyd only needs 2 months of the 4 months he worked in 2012 to have enough time to total 1 full year. File 2008 taxes online free Because he needs only one-half of the actual time he worked, Floyd will use only one-half of his income earned during that period to calculate wages that will be used in figuring his includible compensation. File 2008 taxes online free Using the information provided in Table 3-3, wages for Floyd's most recent year of service are $66,000 ($42,000 + $16,000 + $8,000). File 2008 taxes online free His includible compensation for his most recent year of service is figured as shown in Table 3-4. File 2008 taxes online free After figuring his includible compensation, Floyd determines his limit on annual additions for 2014 to be $52,000, the lesser of his includible compensation, $70,475 (Table 3-4), and the maximum amount of $52,000. File 2008 taxes online free Table 3-4. File 2008 taxes online free Worksheet B. File 2008 taxes online free Includible Compensation for Your Most Recent Year of Service1 Note. File 2008 taxes online free Use this worksheet to figure includible compensation for your most recent year of service. File 2008 taxes online free 1. File 2008 taxes online free Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. File 2008 taxes online free $66,000 2. File 2008 taxes online free Enter elective deferrals excluded from your gross income for your most recent year of service2 2. File 2008 taxes online free 4,4753 3. File 2008 taxes online free Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. File 2008 taxes online free -0- 4. File 2008 taxes online free Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government, or of a tax-exempt organization) for your most recent year of service 4. File 2008 taxes online free -0- 5. File 2008 taxes online free Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. File 2008 taxes online free -0- 6. File 2008 taxes online free Enter your foreign earned income exclusion for your most recent year of service 6. File 2008 taxes online free -0- 7. File 2008 taxes online free Add lines 1, 2, 3, 4, 5, and 6 7. File 2008 taxes online free 70,475 8. File 2008 taxes online free Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. File 2008 taxes online free -0- 9. File 2008 taxes online free Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. File 2008 taxes online free -0- 10. File 2008 taxes online free Add lines 8 and 9 10. File 2008 taxes online free -0- 11. File 2008 taxes online free Subtract line 10 from line 7. File 2008 taxes online free This is your includible compensation for your most recent year of service 11. File 2008 taxes online free 70,475 1Use estimated amounts if figuring includible compensation before the end of the year. File 2008 taxes online free 2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. File 2008 taxes online free  3$4,475 ($2,000 + $1,650 + $825). File 2008 taxes online free Prev  Up  Next   Home   More Online Publications